As a federal government shutdown loomed, lawmakers discussed whether to fold the reauthorization of a popular children’s health plan into a final legislative bargain.
At her weekly press conference, House Minority Leader Nancy Pelosi, D-Calif., made the case for reauthorizing the Children’s Health Insurance Program, or CHIP, for as long as possible.
CHIP provides health coverage to certain low-income children and pregnant women whose family income levels are above the threshold to obtain Medicaid coverage. It is funded jointly by the federal government and the states. In 2016, CHIP served 8.9 million beneficiaries.
The reauthorization "should have been done in September, first of all," Pelosi said in her Jan. 18, 2018. "Second of all, we wanted 10 years … which, by the way, saves $6 billion."
Republicans, she added, rejected a 10-year reauthorization. "Doing it for six years saves $1 billion. That's good," she said. "Doing it 10 years, saving $6 billion is better. In fact, it's best."
A few days later, after government funding had lapsed, lawmakers decided to include a six-year CHIP reauthorization in the bill that reopened the government.
We were struck by Pelosi’s claim that a federal program to provide health coverage for 8.9 million children and pregnant women could actually save the government money, rather than costing it. So we took a closer look.
When we contacted Pelosi’s staff, they pointed us to a Congressional Budget Office analysis of the pending reauthorization bill that had been released the previous day, Jan. 17. CBO is Congress’ nonpartisan arbiter of projected costs of legislation.
CBO said that a six-year CHIP reauthorization would produce an additional $8.204 billion in revenue, but only $7.223 billion in additional costs. That means a cumulative savings of $981 million, or nearly $1 billion. (It’s in the chart on page 4 here.)
As for a 10-year reauthorization, Pelosi’s office pointed us to a Jan. 11, 2018, CBO analysis.
The report projected a 10-year reauthorization "would decrease the deficit by $6 billion over the 2018-2027 period."
So Pelosi was correct on the numbers.
The broader question: Why does CHIP save the government money? In short, it’s because the alternatives cost more.
According to CBO, "extending funding for CHIP for 10 years yields net savings to the federal government because the federal costs of the alternatives to providing coverage through CHIP (primarily Medicaid, subsidized coverage in the marketplaces, and employment-based insurance) are larger than the costs of providing coverage through CHIP during that period."
"It’s a very popular program across party lines, and the CBO score had it saving money," said Linda Blumberg, a senior fellow at the Urban Institute who studies health care policy.
Pelosi said that reauthorizing the Children’s Health Insurance Program "for six years saves $1 billion" and that doing it for 10 years saves $6 billion.
CBO analyses back up Pelosi’s numbers. Because the reauthorization of CHIP would essentially take the place of more expensive programs, doing so would eventually net savings for the government. We rate her statement True.